Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
Return on Invested Capital (ROIC)
Cigna Group, ROIC calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | 4,868) | 4,831) | 7,303) | 6,235) | 9,227) | |
| Invested capital2 | 81,638) | 85,777) | 85,650) | 90,679) | 93,748) | |
| Performance Ratio | ||||||
| ROIC3 | 5.96% | 5.63% | 8.53% | 6.88% | 9.84% | |
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Abbott Laboratories | 9.22% | 8.87% | 10.96% | 11.30% | — | |
| Elevance Health Inc. | 8.97% | 9.21% | 10.24% | 11.26% | — | |
| Intuitive Surgical Inc. | 28.75% | 22.30% | 22.01% | 37.63% | — | |
| Medtronic PLC | 5.44% | 5.89% | 7.02% | 5.59% | — | |
| UnitedHealth Group Inc. | 9.54% | 14.59% | 13.68% | 13.51% | — | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2024 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 4,868 ÷ 81,638 = 5.96%
4 Click competitor name to see calculations.
The Return on Invested Capital (ROIC) for the Cigna Group exhibits a general downward trajectory over the five-year period from 2020 to 2024. Although the company consistently reduced its invested capital base, this contraction was insufficient to offset a more pronounced decline in Net Operating Profit After Taxes (NOPAT), resulting in an overall compression of capital efficiency.
- Net Operating Profit After Taxes (NOPAT)
- Operating profitability experienced significant volatility and a substantial long-term decline. NOPAT peaked at US$ 9,227 million in 2020, followed by a drop to US$ 6,235 million in 2021. A temporary recovery to US$ 7,303 million occurred in 2022, before the profit level fell sharply to US$ 4,831 million in 2023. The 2024 value of US$ 4,868 million suggests a stabilization phase at a significantly lower profitability plateau compared to the start of the period.
- Invested Capital
- A steady and consistent reduction in invested capital is observed. The capital base decreased from US$ 93,748 million in 2020 to US$ 81,638 million in 2024. This represents a total reduction of approximately 13% over five years, indicating a systematic narrowing of the company's capital deployment or the divestment of assets.
- Return on Invested Capital (ROIC)
- The ROIC trend correlates closely with NOPAT fluctuations, starting at 9.84% in 2020 and ending at 5.96% in 2024. A notable dip to 6.88% in 2021 was followed by a recovery to 8.53% in 2022. However, a significant erosion in returns occurred in 2023, with the ratio falling to 5.63%, followed by a marginal increase to 5.96% in 2024. The decline in the ROIC indicates that the operational earnings capacity has diminished at a faster rate than the company's ability to shrink its capital base.
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Decomposition of ROIC
Cigna Group, decomposition of ROIC
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The Return on Invested Capital (ROIC) exhibited a general downward trajectory over the five-year period, declining from 9.84% in 2020 to 5.96% in 2024. Although a temporary recovery to 8.53% was observed in 2022, the overall trend indicates a reduction in the efficiency of capital deployment, characterized by a divergence between operational profitability and asset turnover.
- Operating Profit Margin (OPM)
- A significant and persistent decline in the operating profit margin is observed, falling from 7.72% in 2020 to 2.75% in 2024. This compression represents the primary driver behind the decline in ROIC, suggesting that rising costs or pricing pressures have eroded the profitability of each dollar of revenue generated.
- Turnover of Capital (TO)
- An inverse relationship is evident in the turnover of capital, which grew consistently from 1.70 in 2020 to 3.02 in 2024. This steady increase indicates a substantial improvement in the efficiency of asset utilization, which served as a critical counterweight, preventing a more severe collapse in the total return on invested capital.
- Effective Cash Tax Rate Impact (1 – CTR)
- The tax component remained relatively stable, oscillating between a peak of 76.99% in 2021 and a low of 69.73% in 2023. Because this factor remained within a narrow range, it contributed minimally to the volatility of the ROIC compared to the significant shifts observed in operating margins and capital turnover.
In summary, the decomposition of ROIC reveals that the company's increased ability to generate revenue from its capital base was insufficient to fully offset the sharp decline in operating profitability. The overall reduction in return is fundamentally a result of margin erosion rather than capital inefficiency.
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Operating Profit Margin (OPM)
Cigna Group, OPM calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | 4,868) | 4,831) | 7,303) | 6,235) | 9,227) | |
| Add: Cash operating taxes2 | 1,901) | 2,097) | 2,363) | 1,864) | 3,064) | |
| Net operating profit before taxes (NOPBT) | 6,769) | 6,928) | 9,666) | 8,099) | 12,291) | |
| Revenues from external customers | 246,148) | 194,099) | 179,361) | 172,529) | 159,157) | |
| Profitability Ratio | ||||||
| OPM3 | 2.75% | 3.57% | 5.39% | 4.69% | 7.72% | |
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Abbott Laboratories | 17.09% | 16.84% | 20.24% | 20.37% | — | |
| Elevance Health Inc. | 5.46% | 5.32% | 5.64% | 6.58% | — | |
| Intuitive Surgical Inc. | 32.39% | 28.14% | 26.19% | 33.56% | — | |
| Medtronic PLC | 17.14% | 19.63% | 19.15% | 16.48% | — | |
| UnitedHealth Group Inc. | 6.31% | 9.14% | 9.13% | 8.33% | — | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
OPM = 100 × NOPBT ÷ Revenues from external customers
= 100 × 6,769 ÷ 246,148 = 2.75%
4 Click competitor name to see calculations.
A significant divergence is observed between revenue growth and operating profitability over the five-year period ending December 31, 2024. While revenues from external customers have demonstrated consistent and accelerating growth, the net operating profit before taxes (NOPBT) has followed a generally downward and volatile trajectory, resulting in a sustained compression of the operating profit margin (OPM).
- Revenue Growth Trajectory
- Revenues increased steadily from US$ 159,157 million in 2020 to US$ 246,148 million in 2024. The most substantial increase occurred between 2023 and 2024, where revenues grew by approximately 26.8% in a single fiscal year, indicating a significant expansion in the volume of business or pricing levels.
- Operating Profitability Trends
- In contrast to revenue growth, NOPBT peaked in 2020 at US$ 12,291 million and declined to US$ 6,769 million by 2024. Despite a brief recovery in 2022, the overall trend indicates a reduction in the ability to convert increased revenue into operating profit. By 2024, the NOPBT was approximately 45% lower than the 2020 level, despite the substantial increase in top-line revenue.
- Operating Profit Margin (OPM) Compression
- The operating profit margin reflects a severe downward trend, falling from 7.72% in 2020 to 2.75% in 2024. Although a marginal improvement was noted in 2022 (5.39%), the margin continued to erode in subsequent years. The sharp decline in OPM, particularly the drop to 2.75% in 2024, suggests that operating expenses have grown at a rate significantly faster than revenues, leading to diminished operational efficiency.
The analysis indicates a negative correlation between scale and profitability during this period. The expansion of the revenue base has not translated into proportional gains in operating income, pointing toward structural increases in operating costs or a shift in the mix of services provided toward lower-margin offerings.
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Turnover of Capital (TO)
Cigna Group, TO calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenues from external customers | 246,148) | 194,099) | 179,361) | 172,529) | 159,157) | |
| Invested capital1 | 81,638) | 85,777) | 85,650) | 90,679) | 93,748) | |
| Efficiency Ratio | ||||||
| TO2 | 3.02 | 2.26 | 2.09 | 1.90 | 1.70 | |
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Abbott Laboratories | 0.70 | 0.67 | 0.71 | 0.69 | — | |
| Elevance Health Inc. | 2.24 | 2.44 | 2.33 | 2.14 | — | |
| Intuitive Surgical Inc. | 1.07 | 1.00 | 1.16 | 1.27 | — | |
| Medtronic PLC | 0.47 | 0.44 | 0.46 | 0.42 | — | |
| UnitedHealth Group Inc. | 1.99 | 2.01 | 1.95 | 2.04 | — | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Invested capital. See details »
2 2024 Calculation
TO = Revenues from external customers ÷ Invested capital
= 246,148 ÷ 81,638 = 3.02
3 Click competitor name to see calculations.
Analysis of the capital turnover trends from 2020 to 2024 reveals a significant improvement in the efficiency with which the organization generates revenue relative to its invested capital. This positive trajectory is characterized by a simultaneous increase in top-line growth and a disciplined reduction in the capital base, resulting in a substantial increase in operational leverage.
- Revenue Growth
- Revenues from external customers exhibited a consistent upward trend, increasing from 159,157 million US$ in 2020 to 246,148 million US$ in 2024. The most pronounced acceleration occurred between 2023 and 2024, where revenues grew by approximately 26.8% in a single fiscal year.
- Invested Capital Trend
- Invested capital demonstrated a steady decline over the five-year period, falling from 93,748 million US$ in 2020 to 81,638 million US$ in 2024. This reduction indicates a leaner capital structure and suggests an optimization of the asset base.
- Turnover of Capital (TO) Performance
- The turnover of capital ratio improved incrementally and consistently, rising from 1.70 in 2020 to 3.02 in 2024. This increase is a direct result of the divergence between rising revenues and falling invested capital, signifying that the organization is generating significantly more revenue for every dollar of capital employed.
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Effective Cash Tax Rate (CTR)
Cigna Group, CTR calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | 4,868) | 4,831) | 7,303) | 6,235) | 9,227) | |
| Add: Cash operating taxes2 | 1,901) | 2,097) | 2,363) | 1,864) | 3,064) | |
| Net operating profit before taxes (NOPBT) | 6,769) | 6,928) | 9,666) | 8,099) | 12,291) | |
| Tax Rate | ||||||
| CTR3 | 28.08% | 30.27% | 24.44% | 23.01% | 24.93% | |
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Abbott Laboratories | 22.68% | 21.67% | 23.97% | 20.05% | — | |
| Elevance Health Inc. | 26.66% | 29.13% | 22.01% | 20.22% | — | |
| Intuitive Surgical Inc. | 17.42% | 20.94% | 27.40% | 11.76% | — | |
| Medtronic PLC | 32.75% | 32.28% | 19.53% | 18.59% | — | |
| UnitedHealth Group Inc. | 24.04% | 20.64% | 23.25% | 20.32% | — | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 1,901 ÷ 6,769 = 28.08%
4 Click competitor name to see calculations.
An analysis of the five-year period from 2020 to 2024 reveals a contraction in net operating profitability coupled with a recent escalation in the effective cash tax burden.
- Net Operating Profit Before Taxes (NOPBT)
- A significant downward trajectory in NOPBT is observed, falling from 12,291 million US$ in 2020 to 6,769 million US$ by 2024. Despite a temporary recovery in 2022, the overall trend indicates a substantial reduction in pre-tax operating earnings over the period.
- Cash Operating Taxes
- Cash tax payments have exhibited volatility, peaking in 2020 at 3,064 million US$ before fluctuating between 1,864 million US$ and 2,363 million US$ in subsequent years. By 2024, cash taxes stood at 1,901 million US$, representing a decrease from the initial 2020 levels.
- Effective Cash Tax Rate (CTR)
- The CTR remained relatively stable between 23.01% and 24.93% from 2020 to 2022. However, a notable upward shift occurred in 2023, with the rate peaking at 30.27%, followed by a slight moderation to 28.08% in 2024. This indicates that in the most recent two years, a larger proportion of operating profit was allocated to cash taxes compared to the earlier three-year window.
The divergence between declining NOPBT and the rising CTR in the latter half of the period suggests a diminished tax efficiency, resulting in a higher relative cash tax cost despite lower absolute operating profits.
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